Schizophrenia has resisted traditional forms of social and vocational rehabilitation. While behavioral cognitive interventions have recently shown effects on resistant symptoms or selected aspects of neurocognition and problem solving ability, there has been little evidence of broad generalization to community life. In contrast, Cognitive Enhancement Therapy (CET), a developmental approach to facilitating social cognitive capacities, is demonstrating extensive effects on social cognition, social and vocational adjustment, neuropsychological performance and residual symptoms. This proposal first seeks to undertake and publish extensive analyses of the two year outcomes among 121 patients randomized to CET or Enriched Supportive Therapy. Second, we propose to complete and publish a provocative third year, post-treatment assessment that indicates a maintenance of effects. Third, we shall prepare training materials for dissemination to the public sector. Post-hoc analyses have suggested a therapeutic potential of our recently tested Personal Therapy (PT) for schizophrenia patients who abuse alcohol and/or cannabis, and selected CET principles appear uniquely relevant to the cognitive deficits of this population. Thus, a fourth objective is to develop a modified CET/PT intervention targeted toward the cognitive deficits and the dysregulating temperament of these patients. Improved efficacy might ultimately result by addressing the shared pathoetiologies of schizophrenia and substance use disorder in a single treatment. In order to determine the feasibility, relevance, acceptance and preliminary evidence of efficacy for the new intervention, a progressive series of treatment development pilot studies are proposed that will include 30 schizophrenia patients with a substance use disorder involving alcohol and/or cannabis. These pilot studies continue the process that has historically characterized this program's mission to first develop and later test novel interventions that respond to the needs of underserved schizophrenia patients. If successful, a Treatment Manual will be made available to researchers interested in testing the new approach.